If you’re searching for a place to rent in NJ, you’ve probably noticed that prices are through the roof. Your eyes aren’t deceiving you. New Jersey rent prices are undergoing record-high increases and are now the fourth most expensive in the nation. With inflation and fuel prices driving up the cost of living, rent increase is the last thing New Jerseyans want to hear.

Unfortunately, it doesn’t seem like New Jersey rent prices will drop anytime soon. A recent Rent.com survey found that the state experienced a 32.86 percent increase year-over-year in rent prices–well above the national average. And some areas of the state are worse than others: Jersey City experienced a whopping 44.5 percent increase in one-bedroom apartment prices. The city’s average two-bedroom apartment jumped from $2,210 to $3,061–a 38.54 percent increase in just one year. So why is the New Jersey rental market so insanely expensive right now?

A shortage of housing

The national housing market is experiencing a severe shortage of homes. The US is estimated to be short of more than three million houses for those who can afford to buy them. The lack of housing is due mainly to inflated material costs and labor issues stalling construction projects. Both of which are unlikely to be fixed soon. The housing shortage is driving up prices, meaning some who can afford to buy are holding off until the market cools.

Low vacancies

A competitive housing market drives would-be home buyers to the rental market, creating lower vacancies than usual. To make matters worse, New York City is also experiencing record-breaking rent prices. Many priced-out residents are moving to New Jersey, creating even more demand for rental properties in the Garden State.

All this demand means low vacancies. A recent census report revealed that less than 6 percent of all rental properties in the market were available during the second half of 2021– the lowest vacancy rate since the 1980s. Since vacancies are low and demand is so high, landlords and property management companies can ask for higher rents.

Bidding wars

Bad news for renters: paying above the asking price is no longer exclusive to home-buying. Lower vacancies mean tough competition for renters. Many are forced to offer landlords more than the listed rent to stand out. Some renters offer upwards of a thousand dollars above the monthly rent to land a lease. Offering above-asking rents is becoming the standard in larger cities, and the trend is now spreading to smaller towns as their rental markets are squeezed.

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Will rent prices in New Jersey drop anytime soon?

New Jersey has no state law to control rent increases. However, cities and towns can create ordinances to protect renters within their jurisdictions. New Jersey currently has 99 municipalities with some rent control regulations. Which, according to the think tank Urban Institute, happens to be the highest in the nation.

However, most rental laws only protect tenants during their lease, and landlords can still legally raise rents during renewal. Local governments have little power to protect renters from excessive rent increases when their lease it up. Until the housing market cools dramatically, the rental market in New Jersey will likely stay very expensive.

Should you forgo paying rent in NJ and buy a home?

As interest rates continue to rise, some financial experts recommend that those who feel financially ready buy a home now rather than wait for the market to cool. The reasons driving up housing prices–like inflated construction costs–aren’t likely to go away anytime soon.

And those waiting for the housing market to burst could be waiting a long time for an economic disaster that probably won’t happen. Interest rates, however, are likely to keep rising. Buying a home will only become more expensive the longer you wait. If you’re paying significant rent, it makes more sense to invest in a property to start building equity now. Although the housing market is strained, many great homes are still available across NJ.

Find your dream home in New Jersey

Sick of renting and ready to buy a home in New Jersey? Casa Real Properties has decades of experience helping clients find homes across the state. Our expert agents can help you find the perfect place to match your needs and budget. Whether you’re a first-time buyer or looking for your next investment property, Casa Real Properties can help you achieve all your home-owning goals. Contact us today to get started.

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